How Finance and Supply Chain form a perfect match for supply chain controlling
In his recent series of blogs, Thierry Bruyneel zoomed in on 5 major transformation challenges facing the Finance discipline. One of those revolves around Finance’s ambition to become a true business partner – an evolution that I believe offers a huge benefit from a supply chain perspective. The most obvious place where both parties should come together is the area of supply chain controlling.
Mapping supply-chain cost driversFinance and Supply Chain often seem to be operating in 2 separate worlds. Supply Chain’s job is to get things delivered, whilst Finance is very much focused on and organized around the month-end closing figures. Once those reports are available, Controllers then provide comments and take care of allocating the costs within the organization. Many companies already have Plant Controllers and Commercial Controllers working on a more precise allocation of costs, but somewhere in between them is a vacuum waiting to be filled by Supply Chain Controllers.
Digging deeperBesides allocating supply chain costs correctly, Supply Chain Controllers should also detect anomalies – such as changing order patterns or smaller deliveries – as soon as they arise, allowing Supply Chain Managers to make timely and well-thought-out decisions. Today, these tipping points are often noticed too late, by which time supply chain costs have already risen sharply.
Furthermore, supply chain controlling introduces supply chain variance as a buffer between the invoices and the costs charged to the commercial organization. Hence, it makes Supply Chain accountable! Supply Chain Controllers should reach agreement with the commercial departments on a fixed logistics cost which will be charged to customers throughout the year. If an actual invoice should deviate from this fixed logistics cost, e.g. because a customer’s delivery is dispatched from a different warehouse than normal, the variance should be investigated and explained by Supply Chain.